Exhibit No. 99.1
(WESTERN EXPRESS LOGO) (SMX LOGO)
PRESS CONTACT: RICK PRICKETT PRESS CONTACT: DOUGLAS C. SANDVIG
Chief Financial Officer Senior Vice President,
Western Express, Inc. Treasurer and Chief Financial Officer
(615) 259-9920 Smithway Motor Xpress Corp.
(515) 576-7418
MARCH 22, 2007
FOR IMMEDIATE RELEASE
WESTERN EXPRESS AND SMITHWAY MOTOR XPRESS ANNOUNCE
ACQUISITION AGREEMENT
AND
SMITHWAY REPORTS FOURTH QUARTER AND YEAR-END EARNINGS
NASHVILLE, TENNESSEE AND FORT DODGE, IOWA (PR NEWSWIRE) MARCH 22, 2007 --
Western Express, Inc. and Smithway Motor Xpress Corp. (Nasdaq Capital Market:
SMXC), two premier truckload carriers that haul diversified freight nationwide,
today announced agreement on a plan for Western to acquire Smithway. The
acquisition terms have been approved by both companies' Boards of Directors, and
the transaction is expected to close in the summer of 2007, subject to approval
by Smithway's stockholders and other customary closing conditions.
The acquisition is expected to build upon Western's established dry van
operation by combining the dry van operations of both companies. Additionally,
Smithway's flatbed operation is expected to offer Western the market presence
and reputation to make the combined flatbed operation a force in the industry.
On a combined basis, the companies would operate approximately 1,600 tractor in
dry van operations and 1,400 tractors in flatbed operations. Smithway's
experienced senior management team and employees are expected to remain at
Smithway and play integral roles in delivering the companies' combined services
to the truckload market.
Wayne Wise, Chairman, President, and Chief Executive Officer of Western,
said, "Western is very excited by the prospect of adding Smithway's operations
to our existing business. Western has a history of growing through strategic
acquisitions, and the acquisition of Smithway would be the next chapter in
Western's growth story. The combination of the two companies would place us in
the top 15 truckload carriers measured by revenue, creating more opportunity for
our combined customer, employee, and driver bases. Besides the many obvious
synergies between the two companies' dry van and flatbed operations, the
Smithway people were key to our interest in a transaction. We are always looking
for strong performers, and we look
forward to working with the existing management team as they continue to manage
and grow their business from their existing locations."
"Our Board of Directors is pleased with the terms of this transaction,
which it believes provides great value to Smithway's stockholders," said G.
Larry Owens, President and Chief Executive Officer of Smithway. "The addition of
Smithway's fleet and truckload transportation services brings tremendous value
to Western, creating an even stronger company in the truckload market. By
joining our complementary services, the combined company gives the Smithway
business operations the right platform from which to achieve their full
potential. In addition, our employees will benefit by being part of a larger,
more diversified organization."
STRUCTURE AND TERMS
Under the acquisition agreement, approved by both Boards of Directors, the
stockholders of Smithway will receive $10.63 in cash for each share of Smithway
for a total equity value of approximately $54 million and a total enterprise
value, including Smithway's existing debt, of approximately $90 million. The
transaction is structured as a merger, whereby Smithway will become a
wholly-owned subsidiary of Western. The transaction is expected to close in the
summer of 2007, subject to approval by Smithway's stockholders and other
customary closing conditions.
Morgan Keegan & Company, Inc. served as financial advisor, and Faegre &
Benson LLP served as legal advisor, to Smithway. Morpheus Capital Advisors LLC
served as financial advisor, and Scudder Law Firm, P.C., L.L.O. served as legal
advisor, to Western. JPMorgan Chase Bank has committed financing for the
transaction, subject to customary conditions.
SMITHWAY FOURTH QUARTER AND 2006 EARNINGS
Smithway also announced today its financial and operating results for the
fourth quarter and year ended December 31, 2006.
For the quarter, Smithway experienced a net loss of $42,000 compared to net
earnings of $755,000 for the same quarter in 2005. The fourth quarter included
an expense of $1.5 million, or $948,000, net of the resulting tax benefit, for
an uninsured loss plus legal expenses relating to the settlement of litigation.
Excluding the expense for this uninsured loss, net earnings for the quarter were
$906,000, an improvement of 20.0% as compared to the same quarter in 2005. For
the year ended December 31, 2006, net earnings were $4.3 million compared to
$4.2 million in 2005. The year ended December 31, 2006 also included the
$948,000 expense for an uninsured loss described above. Excluding the expense
for this uninsured loss, net earnings for 2006 were $5.2 million, an improvement
of 23.3% from 2005.
For the fourth quarter of 2006, operating revenue decreased approximately
11.7% to $51.2 million from $58.0 million for the corresponding quarter in 2005.
Operating revenue, excluding fuel surcharge revenue of $7.3 million, decreased
approximately 9.3% to $43.8 million from $48.3 million, excluding fuel surcharge
revenue of $9.7 million, for the corresponding quarter in 2005. For the fourth
quarter of 2006, net loss was $42,000, or $0.01 per basic share and diluted
share, compared with net earnings of $755,000, or $0.15 per basic share and
diluted share, for the same quarter in 2005. The net loss for the fourth quarter
of 2006 included an
expense of $948,000 for the uninsured loss described above. Without this
expense, Smithway would have had net earnings of $906,000, or $0.18 per basic
and diluted share.
For the year, operating revenue increased approximately 3.8% to $228.8
million from $220.4 million in 2005. Operating revenue, excluding fuel surcharge
revenue of $36.1 million, increased approximately 0.9% to $192.7 million from
$191.0 million, excluding fuel surcharge revenue of $29.4 million, in 2005. Net
earnings were $4.3 million, or $0.86 per basic share and $0.84 per diluted
share, compared with net earnings of $4.2 million, or $0.86 per basic and $0.84
per diluted share, in 2005. Net earnings for 2006 included an expense of
$948,000 for the uninsured loss described above. Without this expense, net
earnings would have been $5.2 million, or $1.05 per basic share and $1.03 per
diluted share.
Owens commented, "Our fourth quarter results were achieved in a difficult
operating environment, including continued high fuel costs, increased labor
costs and some softening of demand. Despite these conditions, as a result of
careful expense control, our net earnings improved after adjusting for the
one-time expense we experienced as a result of an uninsured loss associated with
the settlement of a lawsuit. We are happy to have this lawsuit behind us and
feel it is noteworthy that the associated uninsured loss is much lower than the
$11.4 million default judgment originally entered against our subsidiary in this
case.
"Our operating ratio, excluding fuel surcharge revenue and the uninsured
loss, for the quarter was 95.8% compared to 95.2% during the fourth quarter of
2005. Our operating ratio for the entire year, excluding fuel surcharge revenue
and the uninsured loss, improved to 94.3%, from 94.9% during 2005.
"Many of our operating statistics show improvement for the year, including
revenue per mile and fleet size. We are one of the few companies providing an
environment to increase our independent contractor fleet, which grew once again
this year.
"Costs, on the other hand, continue to impact our business. During the
quarter, average fuel prices decreased 6.2% to $2.44 per gallon compared to
$2.60 per gallon in the fourth quarter of 2005, but remained at historically
high levels. Fuel surcharge revenue per gallon decreased approximately 16% as a
result of the decrease in fuel prices and a less favorable environment for
passing fuel surcharges on to customers. During 2006, we increased driver wages
in response to the market. We continually monitor controllable expenses, and our
truck to non-driver employee ratio remained at approximately 5.0 in the 2005 and
2006 quarters.
"We are proud of our fourth quarter and year-end results which were
achieved during a time of challenging conditions in our industry. We continually
work to contain costs and improve our operations so that we can positively
impact future earnings. While we have experienced softness in our core truckload
markets during January and February of 2007, we have witnessed improvement in
March."
ABOUT SMITHWAY
Smithway is a truckload carrier that hauls diversified freight nationwide,
concentrating primarily on the flatbed segment of the truckload market. Its
Class A Common Stock is traded on the Nasdaq Capital Market under the symbol
"SMXC."
ABOUT WESTERN
Western is a rapidly growing truckload carrier with a history of strategic
acquisitions.
This press release and statements made by the Company in its stockholder reports
and public filings, as well as oral public statements by Company
representatives, may contain certain forward-looking information, usually
identified by words such as "anticipates," "believes," "estimates," "projects,"
"plans," "expects," or similar expressions. These statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based upon the current beliefs and expectations of the
Company's management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from those in forward-looking statements: failure of the proposed
acquisition of the Company to close on a timely basis or at all as a result of
unsatisfied closing conditions or other factors; failure to sustain operating
profitability, which could result in violation of bank covenants and
acceleration of indebtedness at several financial institutions; the ability to
obtain financing on acceptable terms, and obtain waivers and amendments to
current financing in the event of default; economic recessions or downturns in
customers' business cycles; excessive increases in capacity within truckload
markets; surplus inventories; decreased demand for transportation services
offered by the Company; increases or rapid fluctuations in inflation, interest
rates, fuel prices, and fuel hedging; the availability and costs of attracting
and retaining qualified drivers and owner-operators; increases in insurance
premiums and deductible amounts, or changes in excess coverage, relating to
accident, cargo, workers' compensation, health, and other claims; the resale
value of used equipment and prices of new equipment; seasonal factors such as
harsh weather conditions that increase operating costs; regulatory requirements
that increase costs and decrease efficiency, including emissions standards and
hours-of-service regulations; changes in management; and the ability to
negotiate, consummate, and integrate acquisitions. Readers should review and
consider the various disclosures made by the Company in this press release,
stockholder reports, and in its Forms 10-K, 10-Q, and other public filings. The
Company disclaims any obligation to update or alter its forward-looking
statements whether as a result of new information, future events, or otherwise.
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA AND OPERATING STATISTICS)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(UNAUDITED) (UNAUDITED)
----------------------- -----------------------
2005 2006 2005 2006
---------- ---------- ---------- ----------
Operating revenue:
Freight $ 57,578 $ 50,656 $ 218,850 $ 226,762
Other 421 537 1,536 2,000
---------- ---------- ---------- ----------
Operating revenue 57,999 51,193 220,386 228,762
Operating expenses:
Purchased transportation 20,465 17,272 76,403 80,052
Compensation and employee benefits 14,207 12,982 56,314 56,423
Fuel, supplies, and maintenance 13,836 11,912 49,957 53,129
Insurance and claims 1,733 1,404 6,708 5,724
Uninsured loss -- 1,529 -- 1,529
Taxes and licenses 814 931 3,599 3,839
General and administrative 2,160 1,858 7,752 7,804
Communications and utilities 327 287 1,189 1,180
Gain on disposal of assets (749) (643) (2,245) (2,794)
Depreciation and amortization 2,863 3,338 11,017 12,355
---------- ---------- ---------- ----------
Total operating expenses 55,656 50,870 210,694 219,241
---------- ---------- ---------- ----------
Earnings from operations 2,343 323 9,692 9,521
Other (expense) income:
Interest expense (558) (647) (1,826) (2,316)
Interest income 26 57 124 183
---------- ---------- ---------- ----------
Earnings (loss) before income taxes 1,811 (267) 7,990 7,388
Income tax expense (benefit) 1,056 (225) 3,749 3,106
---------- ---------- ---------- ----------
Net earnings (loss) $ 755 $ (42) $ 4,241 $ 4,282
========== ========== ========== ==========
Basic earnings (loss) per share $ 0.15 $ (0.01) $ 0.86 $ 0.86
---------- ---------- ---------- ----------
Diluted earnings (loss) per share $ 0.15 $ (0.01) $ 0.84 $ 0.84
---------- ---------- ---------- ----------
Basic weighted average common shares outstanding 4,948,146 4,990,559 4,931,446 4,982,288
Diluted weighted average common shares outstanding 5,057,592 5,087,239 5,047,373 5,082,015
OPERATING STATISTICS
2005 2006 2005 2006
------ ------ ------ ------
Operating ratio (1) 96.0% 99.4% 95.6% 95.8%
Operating ratio, excluding fuel surcharges (2) 95.2% 99.3% 94.9% 95.1%
Average operating revenue per tractor per week $3,575 $3,118 $3,426 $3,478
Average revenue per tractor per week (3) $2,809 $2,534 $2,808 $2,772
Average revenue per seated tractor per week (3) $2,893 $2,589 $2,891 $2,832
Average length of haul in miles 610 610 621 611
Average revenue per loaded mile (3) $ 1.60 $ 1.61 $ 1.56 $ 1.62
Ending company tractors 782 775 782 775
Ending owner/operators tractors 470 474 470 474
Ending trailers 2,047 2,071 2,047 2,071
Weighted average tractors 1,248 1,263 1,237 1,265
(1) Operating expenses divided by operating revenue.
(2) Operating expenses minus fuel surcharge revenue, divided by operating
revenue excluding fuel surcharge revenue.
(3) Excludes fuel surcharge, brokerage, and other revenue. For the three months
ended December 31, 2005 and 2006, brokerage revenue was $2,326 and $1,705.
For the year ended December 31, 2005 and 2006, brokerage revenue was $8,823
and $8,379.
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DECEMBER 31,
DECEMBER 31, 2006
2005 (unaudited)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 168 $ 2,020
Receivables, net 19,820 17,807
Inventories 938 1,158
Prepaid expenses and other 4,287 5,691
-------- --------
Total current assets 25,213 26,676
Property and equipment 121,126 125,714
Less accumulated depreciation 59,704 52,880
-------- --------
Net property and equipment 61,422 72,834
Other assets 2,057 2,055
-------- --------
Total assets $ 88,692 $101,565
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 8,363 $ 10,479
Accounts payable and accrued expenses 13,694 14,208
-------- --------
Total current liabilities 22,057 24,687
Long-term debt 25,185 28,006
Accrued loss reserves, less current portion 3,657 3,952
Deferred income taxes 10,315 13,001
-------- --------
Total liabilities 61,214 69,646
Stockholders' equity 27,478 31,919
-------- --------
Total liabilities and stockholders' equity $ 88,692 $101,565
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